1. THIS appeal is directed against the Order passed by the District Forum, Madikeri on 21.4.1991 in Complaint No. 424/90-91 on its file.
2. IT arises in this way: - The respondent had deposited a sum of Rs. 26,000/- in Fixed Deposit No. 1/88 with the Appellant Bank. One Mr. B.S. Babu had applied for loan to the appellant bank for purchasing an Auto-rickshaw and the loan was advanced to him on the security of the Fixed Deposit of the respondent. B.S. Babu purchased an Auto-rickshaw bearing Registration No. MYZ 6958 and hypothecated the same to the appellant bank towards the loan. B.S. Babu was irregular in the payment of instalment to the appellant bank. The appellant bank issued notice as per Annexure-D to B.S. Babu and the respondent calling upon them to make payment of the loan advanced to Babu. As they failed to make payment, an amount of Rs. 18,583.80p. out of the Fixed Deposit of the respondent was adjusted towards the loan taken by Babu. Hence the respondent filed a complaint before the District Forum for setting aside the said action of the bank and directing the bank to pay the said amount to him.
The appellant bank contended that the respondent who was a guarantor to the loan transaction of B.S. Babu had given the Fixed Deposit as security and a lien had been created on it; that the loan was long overdue and as neither of them repaid the loan inspite of several notices, the bank was justified in adjusting the said amount.
The complainant gave evidence. Accepting his evidence, the District Forum set aside the action of the Bank in adjusting the amount of the Fixed Deposit towards loan taken by Babu and directed the Bank to proceed against the Auto- rickshaw hypothecated by Babu and further directed the Bank to restore the Fixed Deposit amount to the complainant with interest upto date and pay compensation of Rs. 500/- and costs of Rs. 100/-. Hence this appeal by the Bank.
3. WE heard the Counsel for the appellant and the respondent. It is not disputed by the respondent that he was a surety for the loan advanced by the bank to Babu and that he had pledged his Fixed Deposit Receipt to the Bank as security. The Fixed Deposit Receipt has been produced by the Bank. The liability of the principal debtor and the surety is joint and several, so the bank had liberty to proceed against either of them and recover its dues. The bank had Fixed Deposit with it and it was justified in adjusting the amount due towards loan transaction of Babu. It appears the Bank had failed to produce the Fixed Deposit Receipt, the letter of guarantee and the notice before the District Forum. According to the Learned Counsel for the appellant, the bank Manager had sent a letter seeking for adjournment and the District Forum the same and proceeded to dispose of the case and therefore the Bank could not produce those documents before the District Forum. In view of the documents produced before us, we are satisfied that the action of the bank is justified. If that is so, the Order of the District Forum cannot be sustained. In the result, the appeal is allowed and the Order of the District Forum is set aside and the complaint of the Respondent is dismissed. Under the circumstances, we direct the parties to bear their own costs throughout Appeal allowed. ________________
